WestJet complains to ministers about Air Canada pension request

Tue Dec 18, 2012 2:11pm EST
 

By Randall Palmer

OTTAWA (Reuters) - WestJet Airlines Ltd is concerned about special treatment for its main competitor, Air Canada, which is seeking leniency over a gaping pension fund deficit, and records show that WestJet launched a concerted lobbying campaign with the federal government over pensions.

Executives from WestJet, the country's second-largest airline, held a series of meetings on pension issues on November 20-21 with four members of cabinet, including Finance Minister Jim Flaherty, who is in charge of the Air Canada pension file. WestJet executives also met with numerous senior officials as well as lawmakers from the governing Conservative Party.

The meetings and the topic of pensions are recorded in the federal Register of Lobbyists.

Flaherty is considering a request filed by Air Canada for a 10-year extension to the cap on special payments it must make to reduce the deficit in its defined-benefit pension funds, which reached C$4.2 billion ($4.3 billion) at the start of 2012.

"We won't comment on the specifics of individual meetings like these," WestJet spokesman Robert Palmer told Reuters. "But at a general level, we are concerned about the impact on the state of competition caused by Air Canada repeatedly asking the federal government for special assistance, especially at a time when they are expanding their fleet, buying new aircraft and have billions of dollars on the balance sheet."

In 2009, Air Canada won agreement from the government for a moratorium on making special pension deficit payments through 2010. After that, Ottawa agreed to a cap on such payments that would rise from C$150 million in 2011 to C$225 million in 2013.

Air Canada Chief Executive Calin Rovinescu wrote Flaherty on April 26 to ask for a cap of C$150 million a year in special payments from 2014 through 2023.

The airline has won the reluctant support of its unions for the plan, as well as the backing of its retirees, which Flaherty had said was a prerequisite for him to consider an extension. Air Canada was hoping for a decision by Flaherty this year.   Continued...